Distribution Channel’s Length as a Factor of it’s Efficiency

Abstract

Distribution network is system of activities that are provide transfer of economic goods between producers
and final users. It is also known as distribution channel, marketing channel, distribution chain, distribution pipeline,
market chain and trade chain. This network has two or more partners, so it has to be coordinated in the direction of
order fulfilment and satisfied demand.
As a partnership business network, distribution channelsare very important, due to their role in responding to
customers’ requests. Distribution channels could provide competitive advantageforall partners along the network,
through shorter delivery lead time and higher product availability. Although, the main purpose of distribution channels
is providing continuous flows of products to customers, they should be designed to fill customer’s demand with
minimum total cost. Determining the right number of facilities and proper locations for distribution network is
essential issue for companies involved in the channel.
Issue of distribution channels length become more interesting due to the parallel existence of two different trends. On
one side there is tendency for reducing number of partners, facilities or stages of distribution channels, with a purpose
of avoiding extra expenses, but on the other side there is a necessary for involving more partners in distribution
channel, because that is a way for providing greater market share.
Configuration of distribution channels depends from many factors. These factors have internal or external character.
Therefore, the fact that the distribution of the same products in different countries can be performed completely
differentis not surprising at all. In this regard, the task of this papers classification of factors that affect the length of
the distribution channel. In addition, the paper will also indicate advantages, as well disadvantages of both long and
short distribution channels. The goal of the analysis of the factors and the way of designing distribution channels, in
terms of its length, is to make an adequate decision for increasing efficiency of the distribution network.